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The company is already the owner of an oil storage terminal and the operator of a bunker fuel business in the strategic port of Hambantota serving shipping traffic in the Indian Ocean.

Sri Lanka views the proposed project starting with a 100,000 barrels/day capacity as crucial for its energy security that will also generate much-needed export earnings for its cash-strapped economy.

In 2022, Sri Lanka experienced political and economic collapse as the people, hurting from years of government corruption and mismanagement, took to the streets and forced President Gotabaya Rajapaksa to flee the country. Sri Lankans suffered severe fuel and food shortages after the government defaulted on international loans as it racked up record debt and budget deficits.

In the depth of Sri Lanka’s pessimism, Sinopec’s decision to build a new refinery will provide a huge boost of confidence for the hyperinflation-ravaged economy which has scared off investors.

The bolt of good news announced last November by Sri Lanka’s Power and Energy Minister Kanchana Wijesekera contributed to the country’s stock market 3.4% rise over a 10-day period.

“Cabinet approval was granted today to award the contract to China Petroleum & Chemical Corporation (SINOPEC) of China, to enter into an agreement to establish a new Petroleum Refinery & Associated Product Processing center in Hambantota”, he said on social media X.

According to Sri Lanka’s Sunday Times, Sinopec has agreed to set aside 20% of the plant’s products output for the country’s domestic consumption.

The company’s subsidiary, Sinopec Fuel Oil, is the operator of Hambantota’s 140,000-cubic metre storage terminal to support the port’s bunker and LPG supply services.

Hambantota International Port Group (HIPG), which operates the port, is a private limited liability company jointly owned by the Sri Lankan government and China Merchants Port Holdings (CMPort).